The Knowledge Creation and Green Entrepreneurship A Study of Two Vietnamese Green Firms

The Knowledge Creation and Green Entrepreneurship A Study of Two Vietnamese Green Firms tài liệu, giáo án, bài giảng , l...

KNOWLEDGE CREATION AND GREEN

of the business and at the same time add value to the community’s quality of life Using the SECI model as the parameter for analysis, we found that knowledge creation processes were affected by a combination of leadership, teamwork and Ba, corporate culture, and human resource management Our conclusion emphasises the need for future research to further examine the practice of knowledge-based management in cross-industry segments in Vietnam and in other countries with similar conditions

Keywords: Knowledge creation, knowledge-based management, knowledge-creating

companies, green entrepreneurship, Vietnam

INTRODUCTION

The success of a company in the 21st century will be determined by the extent to which it creates and utilises knowledge, which is considered to be the most important source of a firm’s sustainable competitive advantage (Drucker, 1993; Barney, 1991; Nonaka & Takeuchi, 1995; Grant, 1996; Sveiby, 1997) However, this view still seems far from fully comprehending the process of knowledge creation and knowledge utilisation in organisations According to Nonaka and Toyama (2002), knowledge creation occurs physically, mentally and/or virtually

in interaction and/or in place, which is Ba in the Japanese meaning Hence, an

organisational context that favours knowledge creation and subsequent innovation encourages the interpersonal exchange of ideas and experiences and the questioning of established patterns

However, the work of Nonaka and Toyama (2002) and Nonaka and Takeuchi (1995) is based on the Japanese context, mainly the Japanese technology industry, with a growing emphasis on knowledge creation and transfer in key case companies such as Toyota (Ichijo & Kohlbacher, 2008) Wiig (2004) and McKenzie (2003) have adopted Nonaka and Takeuchi’s approaches for application in western contexts Meanwhile, an increasing number of firms are pursuing knowledge management strategies in emerging countries Szulanski (2000) suggests that employees, managers and organisations exist within a societal context that is influenced by the underlying society’s values regarding knowledge creation and sharing Thus, many obstacles exist regarding research knowledge management in these countries, which challenges researchers to adapt western and Japanese methods to distinctive or non-western contexts

According to Hofstede (1980), all countries have something called

“management,” but its meaning differs from one country to another depending on cultural characteristics The question is whether researchers, particularly from the West, are able to understand what happens in emerging countries given cultural, historical and economic differences Management tools applied in developed country contexts to study knowledge sharing may not be applicable or viable when studying knowledge sharing in emerging country contexts This issue has been partially addressed by the works of Sáenz, Aramburu and Blanco (2012), Suppiah and Sandhu (2011), Chawla and Joshi (2010), Buckley, Clegg and Tan (2006), and Michailova and Husted (2003) These studies explore the influence

of the various organisational culture types on knowledge sharing behaviour in organisations in Colombia, Malaysia, India, China and Russia, respectively Nevertheless, these efforts are still insufficient to describe the situation of emerging economies such as Vietnam, a new business entity in Asia

The present research is part of an attempt to examine the dynamic process of knowledge creation, its utilisation, and its relation to green entrepreneurship in the Vietnamese context Accordingly, the theory of knowledge creation through the SECI (Socialisation, Externalisation, Combination and Internalisation)

process (Nonaka, 1991; Nonaka & Takeuchi, 1995) and Ba (Nonaka, Toyama, &

Konno, 2000) was used

For this research, the case study method is a suitable research strategy to empirically examine the phenomenon in context The advantage of the case study method increases when the theoretical refinement of a concept, such as knowledge creation, is still in process (Yin, 1994), and it has potential to accurately control for all other factors that may influence knowledge creation and lack of data The empirical evidence was collected by personal observation through on-site visits and interviews with executives, functional managers, engineers, and workers in both the headquarters and manufacturing plants of

Sannam Food Company (Sannamfood) and Trung Nguyen Coffee Company (Trung Nguyen)

LITERATURE REVIEW

The resource-based view defines a firm as a collection of resources, and it asserts that firms with superior resources will create competitive advantages (Barney, 1992) However, this view fails to explain the dynamism by which a firm continuously builds such resources through interactions with the environment To achieve competitive sustainability, many companies are launching extensive knowledge management efforts (Gold, Malhotra, & Segars, 2001) However, Wiig (1999) suggests that knowledge management is broad, multi-dimensional and covers most aspects of enterprise activities

The concept of knowledge is not new and has existed for ages Various definitions of knowledge exist According to Dalkir (2007), knowledge management is the deliberate and systematic coordination of an organisation’s people, processes, technology, and organisational structure in order to create more value through innovation Chong and Choi (2005) suggest eleven key components for successful knowledge management implementation, which consist of training, involvement, teamwork, empowerment, top management leadership and commitment, information systems infrastructure, performance measurement, culture, benchmarking, knowledge structure and elimination of organisational constraints In conclusion, managing knowledge in organisations requires managing (a) knowledge infrastructure consisting of technology, structure, and culture together with knowledge process architecture of acquisition, conversion, application, and protection (Gold et al., 2001); and (b) several knowledge processes (e.g., socialisation, externalisation, combination, and internalisation) (Nonaka & Takeuchi, 1995)

As described by Nonaka and Takeuchi (1995), knowledge creation starts with

“Socialisation,” which is the process of converting new tacit knowledge through shared experiences in day-to-day social interactions (Nonaka, 1991) The tacit knowledge is made explicit so that it can be shared by others in order to become the basis of new knowledge such as concepts, images, and written documents In the “Externalisation” stage, individuals use their discursive consciousness and try

to rationalise and articulate the world that surrounds them Explicit knowledge is collected from inside or outside the organisation and then combined, edited, or processed to form more complex and systematic explicit knowledge through the

“Combination” process The new explicit knowledge is then disseminated among the members of the organisation and converted into tacit knowledge by

individuals through the “Internalisation” process In this stage, knowledge is applied and used in practical situations and becomes the basis for new routines

Nonaka and Toyama (2002) state that knowledge is created through the synthesis

of the contradictions between an organisation’s internal resources and the environment Thus, a company can combine its internal resources as well as its adjustments to the environment to create new knowledge To effectuate this combination, the top management plays a crucial role because leadership influences the organisational ability and approach to confronting knowledge related issues According to Singh (2008), consulting and delegating leadership styles are positively related with knowledge management, whereas directive and supportive leadership styles are negatively associated with knowledge management practices These differences indicate that human resource management plays an important role in knowledge creation

The knowledge creation process requires Ba (Nonaka, 1991) Ba is a

continuously created generative mechanism that explains the potentialities and tendencies that either hinder or stimulate knowledge creation activities (Lundvall

& Borras, 1999; Nonaka & von Krogh, 2009) In other words, Ba is a

phenomenological time and space where knowledge, as ‘a stream of meaning,’ emerges (Bohm, 1996) New knowledge is created out of existing knowledge

through the change of meanings and contexts Ba might be working groups,

project teams, informal circles, temporary meetings, virtual spaces such as e-mail groups or front-line contact with the customer (Nonaka & Konno, 1998; Watanuki and Kojima, 2007; Kivijarvi, 2008; Rafaeli, Hayat, & Ariel, 2009;

Travaille & Hendriks, 2010) Participants of Ba contribute their own contexts,

and through their interactions with others and the environment, the contexts of

Ba, the participants, and the environment change (see Figure 2)

While leadership, human resource management and Ba play important roles in

knowledge creation, culture is another key component that helps the organisation

to share knowledge Mobley and colleagues (2005) observe that each society is underpinned and defined by a distinctive culture and that culture provides guidance to behaviours of groups and individuals in the society Hence, culture is embedded very deeply in the people of each nation At the individual level, people are often reluctant to share knowledge, as it is a source of power and status Therefore, culture plays a primary role in the likelihood that employees will be willing to work together and share their knowledge (Bollinger and Smith, 2001)

Figure 1 Conceptual representation of Ba

The above literature suggests that several common attributes make a knowledge management initiative a success, including leadership, human resource

management, Ba, and culture These components reflect both knowledge

infrastructure and processes In the present study, these components will be used for studying knowledge management in two Vietnamese companies

RESEARCH METHODOLOGY

Research design

The study takes a case-based approach, using interviews and examining internal and external documents to codify and access knowledge As Yin (1984) suggests, this approach is considered to be useful in gaining an in-depth, holistic understanding of the phenomenon studied The case selection criteria required Vietnamese companies that were more likely to have been in the proactive stage

of knowledge management, to have had its knowledge sharing practices available for access, and to have systematically linked knowledge sharing with practices to create competitive advantage, as suggested by Ambos and Schlegelmilch (2009) and Zhang (2008) In addition, case companies founded and owned by Vietnamese people were selected to minimise the influence of outside culture and

to ensure that the cultural influences were of the prevailing Vietnamese culture Based on the above criteria, Sannamfood Company and Trung Nguyen Coffee Company were chosen for the perceived relevance of the firms to the study objective

The study began with preliminary onsite observations in January 2012 in order to gain a better understanding of the organisational structure and the culture in which it functions The observations also provided us with the effect of the

physical layout of the offices as a facilitator or Ba of unplanned and planned

communication and on the prevailing cultures At the same time, internal and external documents of these companies were collected to access knowledge management implementation

Next, on-site interviews were conducted in February 2012 with the owners, CEOs and employees of these companies in order to view the research topic from the perspective of the interviewees and to understand how and why they came to have their particular perspective (King, 2004) An interview guide sheet that grouped topics/key questions was prepared and used as a framework to ensure some standardisation of topics addressed during the interviews (Welman and Kruger, 2001) This qualitative toolkit will help ensure that the topics are expounded upon, that the questions flow naturally, and that the team gains full insight into the knowledge based management model of the selected case companies All interviews were recorded, and then transcribed and coded All issues of potential relevance and interest were identified and classified to analyse the knowledge management implementation A list of the questions in the interview guide sheet is included in Appendix

Sannamfood Company

The first case company selected for study is Sannamfood, which produces apricot liquor and cultivates fresh forest vegetables Sannamfood was founded in 1994, and its core products are foods and beverages The company has grown through active research and development (R&D), with unique product lines, good business strategy and a sound technological development process The company’s strategy is built around a number of core elements: knowledge capital development, R&D, innovation, partnerships with suppliers, direct sales to key customers and pioneering the use of the Internet and e-commerce Accordingly, Sannamfood has been investing to increase the quantity and quality of its main resources in an effort to build competitiveness in the organic foods and drinks sector The focus of the company’s business has been substantially influenced by the company owner’s childhood in a rural area of Vietnam and his love of agricultural products, which many ordinary farmers did not know how to process

or maintain post-harvest His innovative approach also pays off handsomely by creating new equipment to process agricultural products and by selling to customers at the best prices possible through e-commerce

Products and market: Nuitan apricot wine is produced with 100 percent pure

fresh apricot, which is fermented and bottled at Nuitan, Ba Vi, Ha Tay Province The underlying business philosophy of this product originated from its founder’s

belief that drinking apricot liquor is not only good for health, but also represents

a certain upholding of Vietnamese moral values Nuitan mountain was where the first Vietnamese dynasty was proclaimed some 4,000 years ago Thus, this location represents power and it is a holy symbol of the traditional glory of Vietnamese history, appealing to nationalism Consumers can drink this wine with ice in the summer and with hot water in the winter and can also use it to make cocktails

Knowledge integration and management: The knowledge creation process of

Nuitan Apricot Liquor was divided into four phases of the SECI model as follows:

Table 1

The knowledge creation process of Nuitan Apricot Liquor

Stage

Socialisation Besides being the Chairman of Sannamfood, the owner of this

company has been also a guest lecturer at some universities One

of his hobbies is to keep himself continuously updated by reading business books and daily newspapers By chance, one day he found an interesting article on apricot liquor and was very surprised that the apricot product was expensive and the fruit

sourced from Japan

Externalisation Knowing that apricot is very popular fruit throughout the world,

he decided to invest in apricot product research He formed a development team including himself, the company’s researchers and some technical staff They found that in the pulp and seeds of apricot, there are many kinds of vitamins, especially Vitamin A, Vitamin C, citric acid and other minerals These vitamins and acids improve the osmotic balance between cells and blood, stimulate appetite and improve digestion

Internalisation After having successfully created the apricot liquor, the R&D

team collaborated with other departments in Sannamfood to bottle, package and design the product and develop a marketing strategy to sell the apricot liquor locally and internationally Nuitan apricot wine was first sold in Vietnam in 2009 The marketing department of Sannamfood introduced the product to visitors at the 2009 Vietnam foods and drinks exhibition in Hanoi, whilst also promoting the product in Nuitan restaurants chain Combination The research team decided to further implement several

experiments on growing, processing and fermenting apricot fruit right on their farm in Ba Vi They analyzed apricot wines from China, Japan, Australia, the USA and France to determine the ingredients in use and assess different flavors They even failed many fermented experiments, but after each failure, the lessons were carefully noted down and shared among the research team to improve the next experiment

Table 2

The knowledge creation of Vegiefor vegetables

Stage

Socialisation People used invite Chairman of Sannamfood to eat local products

while he visited some remote areas in Hoa Binh, Lang Son, Phu Tho, Son La, Lao Cai and Tuyen Quang provinces for his business trips in the years 1998 and 2000 He was really interested in the local forest vegetables because it was very delicious with strange tastes He was suddenly thinking that the vegetables might be sold to customers in the city for several reasons Firstly, in order to survive and grow he needs to differentiate his products superior to his competitors This was met with the first Sannam’s philosophical principle - Innovative

in Business Secondly, the nature and clean vegetables are good for customers and society It fits with the second Sannam’s philosophical principle - Friendly in Life

Externalisation He took the vegetables to the lab of Sannamfood and analyzed the

ingredients in the vegetables They set up a research team including Chairman of Sannamfood, researchers and technical staff As a result, they found that the vegetables have high quantities of nutrition compared with the existed vegetables in the supermarkets In addition, they recognized that the forest vegetables are less affected

by insects and diseases It means that they do not need to spray pesticide when they cultivate and grow the vegetables As such, Sannamfood will not only save money for growing the vegetables, but also provide natural and clean vegetables for customers and society This is really a sustainable approach to agriculture production Internalisation As a start, Vegiefor was cultivated in 20ha of Sannamfood farm in Ba

Vi However, the demand of Vegiefor was high, so Sannamfood has been cooperated with local famers in cultivation of Vegiefor More specifically, Sannamfood invested in equipments, technical skills, and

Vegiefor varieties to supply to farmers in the network Vegiefor vegetables are harvesting, packing, and distributing by Sannamfood

through Senmart - an online sales system Famers concentrated only

on cultivation of Vegiefor Sannamfood and famers also signed the contract on profit allocation for this cooperation

Combination The Chairman of Sannamfood then organized and chaired a meeting,

including key managers at Sannamfood, such asResearch manager, Marketing manager, Sales manager, and Nuitan Restaurant manager,

to share his new ideas and discuss about the opportunities to grow and sales forest vegetables to the markets After the meeting, some technical teams were formed in order to find more forest vegetables They went to many mountains provinces in search for new forest vegetables When they collected new forest vegetables, they immediately sent it to lab of the company for ingredient analysis Sannamfood first introduced its green vegetables at the Nuitan Restaurants of Sannamfood in Hanoi and were surprised with the positive feedback of the customers At the end, they have chosen about 20 different kinds of forest vegetables to add to its product line

to be market on the large scales

The second product of Sannamfood is Vegiefor, which is a brand series of special vegetables such as Vegie Bang, Vegie Sau Sau, Vegie Tiger Tonge and Vegie Elephants Ears These vegetables are the result of many years of research, testing and analysis of their nutritional composition The Vegiefor of Sannamfood has been officially certified fresh, safe and nutritious by the relevant authorities The detailed knowledge creation of Vegiefor is divided into the four phases of the SECI model as follows:

The research results, the name of each vegetable, and the brand name Vegiefor later became the company’s intellectual property These vegetables are grown and directly packaged at the farm and factory of Sannamfood in Nuitan, Ba Vi District Approximately 20 tons of Vegiefor are provided to the Nuitan Restaurants of Sannamfood and selected customers per month, and the demand for Vegiefor remains consistently higher than the capacity of the company’s farm The average price of Vegiefor is three times higher than that of high-grade vegetables on the Vietnamese market Vegiefor is produced according to the hazard analysis and critical control points system, and it avoids middle agents by being delivered from the farm directly to the customer's home Selling directly to customers helps Sannamfood better understand customer preferences and needs

Trung Nguyen Coffee Company

The second case company studied is Trung Nguyen Caffee Company, which specialises in coffee cultivation and coffee processing In 1996, the company was founded in Buon Me Thuot with its core products being coffee and instant coffee Over time, the company has built a network of more than 1000 company-owned

or franchised shops in a number of countries From its beginning, Trung Nguyen has become the dominant producer of branded gourmet coffee in Vietnam because it has chosen the appropriate niche to serve All beans for Trung Nguyen's world class production facilities come from contracted growers

This creative and appropriate strategy has created Trung Nguyen's position as a dominant domestic producer with global aspirations Trung Nguyen's branded coffees are already present in 43 countries, and the company has earned the nickname ”the Starbucks of Asia" for its successful establishment of a chain of more than 1000 coffee shops, as well as a network of distributors throughout the world Trung Nguyen blends its coffees to provide a range of tastes and caffeine levels as part of the Vietnamese coffee culture, which reflects a wide variety of brands and tastes

Products and market: At the beginning of the 1990s, most Vietnamese coffee

was of low quality and was sold at discounted prices overseas The CEO of Trung Nguyen believed that high-quality Vietnamese gourmet coffees could be

produced and sold profitably Accordingly, in the mid-1990s, he launched Trung Nguyen, a coffee manufacturer and cafe chain In the home market, one of Trung Nguyen’s best known products is “Creative Coffee”, made from varieties of Arabica and Robusta, as well as Se, Chari, Excelsior and Catimor Creative Coffee products include 5 different types, ranging from Creative 1 to Creative 5 The different types of Creative Coffee are produced according to the different consumer tastes

Knowledge integration and management: The knowledge creation process of

Creative Coffee was divided into the four phases of the SECI model as follows:

Table 3

The knowledge creation process of Creative Coffee

Stage

Socialisation At the beginning, the CEO of Trung Nguyen and his friends

realized that the highland region of Vietnam is one of the world's best environments for coffee cultivation, combining the right altitudes, soils, natural drying conditions and temperatures However, Vietnam coffee was of low quality and sold at low price in overseas markets

Externalisation The CEO of Trung Nguyen and his friends discussed these

issues with their few staff It was agreed that the best way was

to learn from practical experience by referring to similar case studies on the Internet from other countries and foreign companies and take notes of new developments from the newspapers

Internalisation The first Trung Nguyen Coffee Shop was opened in Ho Chi

Minh City in 1998 The combination of heritage, national culture and values, and modernity is at the heart of the brand, whether in the packaging or the styling of the coffee shops aiming at theemerging middle class as its customer base At the same time, it formed a supply chain with farmers/growers to ensure the quantity and quality of coffee

Combination As the owner of a coffee-processing business, the CEO of

Trung Nguyen and his friends could improve the quality of the products, but access to markets remained a key stopper for the company’s growth ambition as it did not own or control efficient distribution network The answer was to set up a chain

of coffee shops, modeled in part on Starbucks that would also sell coffee beans for home consumption with 5 different types

of Creative Coffee

The most specialised product of Trung Nguyen is Weasel Coffee, made from coffee berries that have passed through the digestive tract of a civet cat Marketing this expensive delicacy, which is harvested only in Southeast Asia, helps identify Trung Nguyen with the Vietnamese coffee culture Trung Nguyen

has also diversified into decaffeinated and instant coffee production with the G7 product

ANALYSING THE COMPONENTS OF KNOWLEDGE CREATION

The following analysis brings together the various observations from the data collected and frames them in terms of the selected companies’ knowledge infrastructure and processes for managing knowledge We highlight the strong

support of the companies’ leaders in the areas of R&D, teamwork and Ba,

organisational culture, and human resource management for knowledge management

Support of Leaders for Research and Development (R&D)

The R&D principle is based on the belief that the direct experiences of Sannamfood employees provide them with valuable knowledge to innovate and solve problems Although an R&D project does not pay for itself in the short term, this type of investment has established its competitiveness based on continuous innovation and high performing staff At Sannamfood, the staff is motivated, innovative and relatively young All employees are given opportunities to generate new ideas and participate in R&D projects Sannamfood also recognises the importance of continual improvement If a project fails, the effort is analysed to identify the reasons for the failure To be an innovative company, Sannamfood emphasises the need for new ideas and to facilitate them efficiently and effectively

At Trung Nguyen, the R&D policy encourages creativity All employees have the right to freedom and creativity in developing products Therefore, the tacit knowledge and experiences of employees are leveraged to create new coffee formulas and products The Board of Directors views failed experiments not as failures, but rather as valuable lessons to be learned for future experiments and creativity

The combination of state-of-the-art technology together with exotic oriental flavours is Trung Nguyen’s secret formula This secret formula involves the blending of rare medicinal herbals, special sources of energy from gemstones, and other special ingredients In creating a new coffee concept, Trung Nguyen boasts that it does not regard coffee as a normal drink, but rather as a drink of energy to stimulate brainpower and to be a source of creativity for the drinkers

Teamwork and Ba

In particular, the CEO of Sannamfood emphasises the importance of teamwork and aims to create a supportive working environment in his company, in which